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Stochastic income and conditional generosity

Author

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  • Kellner, Christian
  • Reinstein, David
  • Riener, Gerhard

Abstract

We study how other-regarding behavior extends to environments with uncertain income and conditional commitments. Should fundraisers ask a banker to donate "if he earns a bonus" or wait and ask after the bonus is known? Standard EU theory predicts these are equivalent; loss-aversion and signaling models both predict a larger commitment before the bonus is known; theories of affect predict the reverse. In field and lab experiments, we allow people to donate from lottery winnings, varying whether they decide before or after learning the lottery's outcome. Males are more generous when making conditional donations before knowing the outcome, while females' donations are unaffected. Males also commit more in treatments where income is certain but the donation's collection is uncertain. This supports a signaling explanation: it is cheaper to commit to donate before the uncertainty is unresolved, thus a larger donation is required to maintain a positive image. This has implications for experimental methodology, for fundraisers, and for our understanding of pro-social behavior.

Suggested Citation

  • Kellner, Christian & Reinstein, David & Riener, Gerhard, 2015. "Stochastic income and conditional generosity," DICE Discussion Papers 197, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  • Handle: RePEc:zbw:dicedp:197
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    Cited by:

    1. Attanasi, Giuseppe Marco & D'Albis, Hippolyte & Thibault, Emmanuel, 2018. "An Experimental Test of the Under-Annuitization Puzzle with Smooth Ambiguity and Charitable Giving," TSE Working Papers 18-932, Toulouse School of Economics (TSE).
    2. Bonnet, Céline & Schain, Jan Philip, 2017. "An empirical analysis of mergers: Efficiency gains and impact on consumer prices," DICE Discussion Papers 244, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

    More about this item

    Keywords

    social preferences; contingent decision-making; signaling; uncertainty; prospect theory; affective state; gender; charitable giving; public goods; experiments; field experiments; bonuses;

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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